Why Transport Infrastructure Does Not Necessarily Narrow Regional Economic Disparities
Market Access, Agglomeration, and Local Absorptive Conditions
Keywords:
regional economics, transport infrastructure, market access, agglomeration, spatial spillovers, regional disparitiesAbstract
Transport infrastructure lowers spatial frictions and expands market connections, but greater connectivity does not necessarily increase peripheral production or narrow regional income gaps. This article asks under what conditions improved transport access can support sustained peripheral development. It develops an analytical framework through a narrative synthesis of selected theoretical and empirical studies on market access, agglomeration, commuting, and place-based policy. The comparison distinguishes transport modes, geographical scales, and outcome measures rather than pooling heterogeneous estimates. The central argument is that transport improvements expand both peripheral firms’ selling opportunities and core firms’ competitive reach. Their net local effect depends on scale economies, supplier linkages, skills, land costs, and factor mobility. Local output, incumbent residents’ welfare, and interregional disparities therefore require separate evaluation. The framework generates testable propositions concerning pre-existing supplier capacity, firm selection, and commuting-based welfare gains. It also identifies nonrandom route placement, staggered openings, anticipation, and network spillovers as central challenges for causal interpretation. Evidence of local industrial decline can coexist with aggregate gains from lower trade costs; neither outcome alone establishes whether disadvantaged residents benefit. The article contributes an outcome-specific framework for interpreting apparently conflicting evidence and designing evaluations. Policy should identify binding local constraints, distinguish newly created activity from relocation, and assess real household welfare and cross-regional net gains rather than infer success from connectivity or local gross domestic product alone. These propositions remain to be tested with original data.
References
Allen, T., & Arkolakis, C. (2014). Trade and the topography of the spatial economy. The Quarterly Journal of Economics, 129(3), 1085–1140. https://doi.org/10.1093/qje/qju016
Barca, F., McCann, P., & Rodríguez-Pose, A. (2012). The case for regional development intervention: Place-based versus place-neutral approaches. Journal of Regional Science, 52(1), 134–152. https://doi.org/10.1111/j.1467-9787.2011.00756.x
Baum-Snow, N., Brandt, L., Henderson, J. V., Turner, M. A., & Zhang, Q. (2017). Roads, railroads, and decentralization of Chinese cities. The Review of Economics and Statistics, 99(3), 435–448. https://doi.org/10.1162/REST_a_00660
Callaway, B., & Sant’Anna, P. H. C. (2021). Difference-in-differences with multiple time periods. Journal of Econometrics, 225(2), 200–230. https://doi.org/10.1016/j.jeconom.2020.12.001
Chandra, A., & Thompson, E. (2000). Does public infrastructure affect economic activity? Evidence from the rural interstate highway system. Regional Science and Urban Economics, 30(4), 457–490. https://doi.org/10.1016/S0166-0462(00)00040-5
Donaldson, D. (2018). Railroads of the Raj: Estimating the impact of transportation infrastructure. American Economic Review, 108(4–5), 899–934. https://doi.org/10.1257/aer.20101199
Donaldson, D., & Hornbeck, R. (2016). Railroads and American economic growth: A “market access” approach. The Quarterly Journal of Economics, 131(2), 799–858. https://doi.org/10.1093/qje/qjw002
Duranton, G., & Puga, D. (2004). Micro-foundations of urban agglomeration economies. In J. V. Henderson & J.-F. Thisse (Eds.), Handbook of regional and urban economics (Vol. 4, pp. 2063–2117). Elsevier. https://doi.org/10.1016/S1574-0080(04)80005-1
Duranton, G., Morrow, P. M., & Turner, M. A. (2014). Roads and trade: Evidence from the US. The Review of Economic Studies, 81(2), 681–724. https://doi.org/10.1093/restud/rdt039
Faber, B. (2014). Trade integration, market size, and industrialization: Evidence from China’s National Trunk Highway System. The Review of Economic Studies, 81(3), 1046–1070. https://doi.org/10.1093/restud/rdu010
Goodman-Bacon, A. (2021). Difference-in-differences with variation in treatment timing. Journal of Econometrics, 225(2), 254–277. https://doi.org/10.1016/j.jeconom.2021.03.014
Kline, P., & Moretti, E. (2014). Local economic development, agglomeration economies, and the big push: 100 years of evidence from the Tennessee Valley Authority. The Quarterly Journal of Economics, 129(1), 275–331. https://doi.org/10.1093/qje/qjt034
Krugman, P. (1991). Increasing returns and economic geography. Journal of Political Economy, 99(3), 483–499. https://doi.org/10.1086/261763
Monte, F., Redding, S. J., & Rossi-Hansberg, E. (2018). Commuting, migration, and local employment elasticities. American Economic Review, 108(12), 3855–3890. https://doi.org/10.1257/aer.20151507
Neumark, D., & Simpson, H. (2014). Place-based policies (NBER Working Paper No. 20049). National Bureau of Economic Research. https://doi.org/10.3386/w20049
Qin, Y. (2017). “No county left behind?” The distributional impact of high-speed rail upgrades in China. Journal of Economic Geography, 17(3), 489–520. https://doi.org/10.1093/jeg/lbw013
Redding, S. J., & Rossi-Hansberg, E. (2017). Quantitative spatial economics. Annual Review of Economics, 9, 21–58. https://doi.org/10.1146/annurev-economics-063016-103713
Redding, S. J., & Sturm, D. M. (2008). The costs of remoteness: Evidence from German division and reunification. American Economic Review, 98(5), 1766–1797. https://doi.org/10.1257/aer.98.5.1766
Redding, S. J., & Turner, M. A. (2014). Transportation costs and the spatial organization of economic activity (NBER Working Paper No. 20235). National Bureau of Economic Research. https://doi.org/10.3386/w20235
Sun, L., & Abraham, S. (2021). Estimating dynamic treatment effects in event studies with heterogeneous treatment effects. Journal of Econometrics, 225(2), 175–199. https://doi.org/10.1016/j.jeconom.2020.09.006
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Ruihao Ge

This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright. Articles are published under the Creative Commons Attribution 4.0 International licence (CC BY 4.0): https://creativecommons.org/licenses/by/4.0/. Reuse requires appropriate attribution, a link to the licence and an indication of changes. Separately identified third-party material may require permission.